ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Additional or improved capital goods is intended to increase labor productivity by making companies more productive and efficient. Newer equipment or factories leads to more products being produced, and at a faster rate.

Detailed explanation-2: -An increase in capital per hour (or capital deepening) leads to an increase in labor productivity. For example, consider factory workers in a motor vehicle plant. If workers have increased access to machinery and tools to build vehicles, they can produce more vehicles in the same amount of time.

Detailed explanation-3: -Capital goods are the assets used by businesses in the course of producing their products and services, and can include buildings, machinery, tools and equipment.

Detailed explanation-4: -Capital goods serve a critical role in the economy. When companies invest in capital goods, they expand their ability to create products and services. This allows businesses to make a profit and hire employees, and can result in economic growth for society as a whole.